What are your main activities across the continent, and how do you specifically impact Nigeria?
Altica Partners is the only regulated, Africa-focused investment firm in the Middle East. We cover the entire GCC region and have two business lines. The first is our asset management business. As a private credit business, we invest in fast growing medium-sized African companies that are struggling to grow due to a lack of capital. We use credit products, as we are not a private equity firm but a private credit firm. We lend to these companies either using senior secured structures or mezzanine structures. We provide loans to many companies that cannot obtain credit from international or local banks or are able to obtain it but at extremely high rates. The idea is to enable these African businesses to grow so that in a few years, large private equity firms will find them attractive. Alongside private credit is our fixed income strategy where we invest in African government sovereign bonds, finance institutions, and local corporates. There is a second part of Altica Partners, what we call risk advisory, which provides guidance to Middle East sovereign wealth funds, family offices, and companies that want to do business in Africa.
Which countries are the biggest focus?
We have an internal rating system of countries, and at the moment Nigeria is a Tier 1 country. Ghana, Ethiopia, Ivory Coast, Senegal, Botswana, Kenya, Uganda, Tanzania, and Cameroon are also Tier 1 countries, while South Africa is in Tier 3. Tier 1 countries mean 50-70% of our capital will go to those countries, as opposed to 5-10% for Tier 3. South Africa has a large amount of funds, banks, and initiatives for SMEs but there is a need for capital elsewhere.
Which sectors are you focused on the most?
The sectors that are critical to Nigeria are import substitution or manufacturing. Rather than just exporting raw materials, we want Nigerian businesses to create local value before exporting. The second sector is energy, particularly renewables, as many businesses are coming to us seeking capital there. A third key sector is agribusiness, which is anything from farming to the storage, logistics, and processing of agriculture goods. Nigeria's healthcare also need support, especially on the back of COVID-19, so we are keen on helping pharmacies, hospitals, diagnostic centers, and anything else in that space. Lastly, there are some areas that many local banks do not spend resources on, such as media and technology. This is a growing area, so we have looked at everything from Nollywood film producers to fintechs.
How has the pandemic affected investment flows into Nigeria?
African bank lending has plummeted, so companies are now coming to us in Dubai and London to look for capital. If not for COVID-19, we would not be seeing these companies, as local banks would have been able to fulfill their demand. Many of these companies are also looking to restructure. Before COVID-19, it was really about growth capital, though now it is often about restructuring and survival. That is why companies such as ours are critical to supporting the Nigerian economy.
What is your outlook for Nigeria's economy and business landscape moving forward?
My outlook is stable to positive. Two things are the main drivers of many African economies: trade and commodity prices. Trade is critical to Nigeria because its large population will always be buying, selling, importing, and exporting, and this will only increase further with AfCFTA. As long as the government can facilitate an environment where businesses can trade with each other locally and internationally, the Nigerian economy will benefit. Secondly, unfortunately most African economies are aligned with commodity prices, which are determined outside Africa. As the world slowly starts to emerge from the pandemic, demand for commodities will increase. Oil price will likely be less volatile over the next 12-24 months, which will allow the country to stabilize the currency, balance its payments, and so on.